Elderly relative with girl in Spanish city (7)
I believe the answer is:
granada
'spanish city' is the definition.
(Granada is a city in Spain)
'elderly relative with girl' is the wordplay.
'elderly relative' becomes 'gran' (short for grandmother).
'with' is a charade indicator (letters next to each other).
'girl' becomes 'ada' (girl's name).
'gran'+'ada'='GRANADA'
'in' is the link.
(Other definitions for granada that I've seen before include "sunny city" , "City of Andalusia" , "Spanish city, site of the Alhambra" , "Andulasian city" , "car in > Spanish city" .)